 I'm at VMworld 2012, I'm John Furrier, the founder of SiliconANGLE.com, this is theCUBE, our flagship telecast, we go out to the events, extract the signal from the noise, and I'm joining my co-host Dave Vellante, and we're here with Todd Nielsen, CUBE alumni, when we first launched theCUBE in 2010, VMworld was our first breakout show. Todd, you remember, you did a press conference with Compellants, our main hallway. Yeah, we were upstairs at the front door because we weren't sure if it was going to be big and it was going to take off, and now you guys dominate the hangout space. The only thing more popular than theCUBE is the little Rock'em Sock'em Robot games right there. You can understand why. Yeah, we're excited to have you, you're certainly a great guest who provides a lot of signal from the noise, and you're now in charge of all the developers, and essentially the app, when I say app, the developer side of it, which is huge for you guys, you guys have made a lot of progress over the past two years on filling in the components of the overall vision, where our spring source was the first real telling signal there, you brought those guys in, big developer focus, you get cloud foundry, you got a lot of developer action going on around VMware, and we were commenting at the end of day one, kind of our day one wrap up that the observation that this is a new VMware in the sense that, one, we're in a modern era of computing, data center, network data center, the new experiences abstract, pool, automate, it's operating system, things we talked about in 2010, but it's just, it's more than VMware now, right? So, I know you guys always had kind of more than, but now it's more than VMware, multi-vendor, so developers are a big part of that, so my first question is, give us the quick sound bite on VMware's strategy with developers, and then we'll go into some specific questions around, the use cases, big data, and then the networking data center. Sure, well, a couple things, so one, applications drive infrastructure, and in this disruptive state of the cloud era that we're in right now, we know that winning the hearts and minds of developers is critical to the long-term success, so when people ask about, well, what's the revenue contribution for your group? I always say, you know, the revenue contribution isn't significant at the moment, but when people look back 10 years from now, they're going to say, wow, VMware was successful because of the foundation and all the work that we did with developers to help them be successful driving infrastructure like our staff. And VMware is a great ecosystem and community, always had that, it's always been vibrant and opinionated, you know, we see that all the time, but now we're in a modern era with Flash dominating the storage layer, we're calling it data infrastructure, and you guys are driving it with the SDN, so we're going to find networking now, moving to the data center, has that changed the kind of target audience that you want to reach out to beyond your traditional developers? Because you've got network admins now, you have a whole, you've got big data exploding, what's your view there? Sure, well the other thing that we've done is with the spring source acquisition, which you mentioned we did in August of 2009, prior to that, we didn't really have much presence in the open source community, and in the developer world, open source is table stakes to be, you have to have a seat at the table by being an active participant in that world, and now we're a tremendous participant and provider of technology into this ecosystem, one of the things we demoed on Monday, in fact, was some open source code we code named Serengeti, which is about helping Hadoop really run well in a virtual environment, so reaching out to that community and being an active participant where you're not tagged or striped with the capitalist pig mantra, but instead you can be, oh yeah, you understand the good for the developers. The open stack announcement as well. Absolutely, and the open stack announcement, I mean, lots of really exciting things happening. So yeah, that Serengeti piece is interesting. From an application standpoint, do you see those worlds coming together, the big data analytics, feeding the transactional applications in a way that's going to drive new types of value to enterprises? Absolutely, in fact, last year we did a study at the beginning of the year and we wanted to find out who's doing stuff with big data, and so the team went and they came back and said, oh my gosh, you wouldn't believe it. You know, we found companies like eBay and Yahoo and Google, and I was like, no, we don't want insight baseball. I want real customers. And at the beginning of last year, we couldn't find anything. They came back then about VMworld timeframe last year and found, wow, we can't find a company that's not doing something with big data. Now in our opinion, big data is kind of like cloud was three years ago, where everybody has a proof of concept, but no one's really comfortable in saying what it is or defining it. And so when someone says they have a big data proof of concept, I generally ask them, so what are you doing? You're telling me about it. And the response is, I can see the fear in their eyes and they go, well, it's big, really big. And so we have a little bit of just definition and specificity in the technology that's going to play out, but I'm going to see all kinds of new types of applications where people want to understand how to get closer to their customers, how to actually generate revenue. And so the types of deals we're seeing aren't the classic cost reduction types, but it's how you can generate. We just had Javi Ayan who was talking about the endpoint being multiple devices. And so with big data, one of the things that we're seeing in terms of how people are using it, kind of the low hanging fruit, if you will, is the analytics, right? So analytics is like the classic iPad sales pitch. Mobile device or iPad or Nexus 7, I can run my business on it. But that's a developer mind shift. So Javi was talking about like, hey, developers, I think differently. Don't take that bloated app and put it here. How are you guys targeting this new breed of developers? How are you going out there and what are you offering them with tools? Is there a specific new shift that you're seeing? Can you comment and give us your perspective on that? Sure. In that particular case, we're doing a lot of outreach. We've doubled the size of our evangelism team that's focused not just on Cloud Foundry and VFabric, but really reaching out and driving developer awareness. And then second, buy things like Serengeti and some of the investments we've made with, we acquired a company earlier this year called Cetus. And I believe you're going to have Moodu or someone later on today. Great guys, great guys. So we'll be talking about what we can do there with real-time analytics as a service. We've got some cousins over on the EMC side of the house and the Green Plum Division, which is really focused on big data. We do a fair bit of work with them and jointly reaching out to the developer community. So in the early days, it's get the developers educated on what's possible, as well as then get the line of business understand, okay, what's the real business value? Because at the end of the day, you need the business value and the technology to meet for it to really take off to be a killer app. And that's a piece I have to say. I mean, I love the messaging, but I have to say the abstract, the pool, the automated, that's all great. But the other thing I go, eh, what's the business value? And that's really, you're kind of ahead of business value. Yep, yep. So what I'm looking for, Todd, and I'd love to point a view on this, is that next wave of applications is going to take advantage of all that great infrastructure, flash and all these cool things that are happening to really drive productivity. You and I, when we first met, we talked about, it was in the depths of the recession, and you said to me, hey, VMware's doing its part. We're hiring like crazy. We said, yo, this is a VMware driven enterprise economy. Are we going to see the point with these new applications that IT actually becomes an area where CEOs say, wow, I got to invest in that. I'm actually going to spend more than that. Absolutely, we're starting to see now, if you look at like the retail environment, people are trying to identify, how can I track my customer's behavior? How can I learn more about what they want? Another large customer of ours that happens to have a lot of theme parks is trying to figure out how they can effectively get people through the different rides and through the parks and make sure they maximize the experience. And it's a revenue generation or a positive experience generation for them, not a cost reduction. If you think about, you know, mobile, Javier was on, just two years ago, we saw the first app where you could take a photo of a check and deposit it in your checking account. I mean, that's like, wow, that's crazy stuff. And yet, we're going to see more and more of those kinds of applications enabling users to do things and be more connected on whatever their device is to do their life. So, Todd, my question, my next question for you is a personal perspective with a little bit of VMware color, if you could, because you've been with VMware for a while, you know the culture, you've seen where it's coming, where it's going. And with the AcroSystemness Sierra, it introduces and validates software, which obviously we've been talking about, we believe is huge, in the data center. So on the big data side, I think of that as above the stack, analytics, apps, mobile, and using data as a developer environment for the end user experience. But below that, you got the infrastructure. So while we were asking Steve Herrod, there's a new breed of developers because software resonates when someone says, hey, software-defined data center is going to create huge new opportunities. How do you view that? What's your perspective on that market? It's an emerging market, it's growing pretty fast, it's changing the equation on the infrastructure side, enabling more change, and that's going to affect on the top of the stack. What's your perspective in VMware's view there? Yeah, so the thing about the developer community is a lot of people, they aren't close to it, they just think, oh, they're developers, so that one developer is the same as another. But you really need to then understand the taxonomy or the segmentation of the different types of developers. There are your classic enterprise developers, there's classic guys that build applications, and then the folks that work in the infrastructure are generally more kind of system software type folks that are writing device drivers, lower level type utilities and functionality, even lower than that, as far as the types of things they're building. So the best example is, I spent many years early in my career at Microsoft, and when you would go to a Microsoft to lower conference, and then you would go to an Intel software developer conference, I was like, night and day. Yeah, they're completely different people. Because, you know. They talk in Hexadec mode. Yeah, well, and the Intel folks are thinking about device drivers and lower level stuff that the Microsoft developers weren't necessarily talking about. And so a lot of the layer one or the infrastructure software developer outreach we have is for these systems developers that are really going to take advantage of some of the bandwidth acceleration and cool networking and cool storage, and really taking advantage of some of those opportunities. Like Flash, I mean, we're very excited about that. Just to get back to the thing we're talking about, the driving that business productivity. I mean, orders of magnitude change in the way people are thinking about this. You know, Gardner had a study recently where they, or he had a statement, they came out and said they believe that over the next three years, the chief marketing officer in Enterprise is going to spend more on technology than the CIO. And the point was, there's just such opportunity to reach out and get customer intimacy and understand what's going on, that that's where there's going to be a lot of technology investment. Whereas the cost reduction stuff will continue, but it won't be as- Well, the Facebook IPO didn't, you know, do it. So it's got to be something like that. They're really trying to, maybe the Enterprise can do that. So Todd, Wikibon did a research study that a year and a half ago on IO-centric infrastructure that really kind of set the table for what we're seeing now with IO-centric infrastructure. Node.js on the top of the stack. Then all going down with Flash. So we had a quote on theCUBE yesterday that Flash has changed the developer landscape. It's a developer's dream. A lot of persistent memory, a lot of access. So from a programmer's perspective, a huge developer surge with Flash. And you think at the top of the stack with Node.js and things on the cloud side is a completely phenomenal movement. The question is, is that are you guys offering certain parts of your stack as an enablement to those developers? Are there specific new things that you're seeing in the Enterprise to make tech advantage of, say, Flash? Yeah, so a couple of things. So from our perspective at the developer platform layer, we want to actually be abstracted above it. And so if Flash is there, we want you to have it to be less latency, faster, better performance, et cetera. But we don't want it to actually change the programming model. So to answer your question, we are seeing a lot of interest in Flash and some of these new innovations to enable developers to build applications that can take advantage of some of these benefits. Although if I could, just saying you want to preserve the existing programming model, although there are examples where the programming model is changing and it's driving orders of magnitude of new business. Absolutely. But you see those two tensions pulling at each other? Oh, absolutely. There's a classic, what I'll call, a web slash client server programming model. And then there is a cloud programming model. But in this cloud programming model, we don't think whether Flash is there or not should be the impact. Relative to cloud foundry, because that's attracting a lot of developers and like I said, a lot of the developers who are software, traditional software developers, you know, Rails and user cloud, and they don't want to deal with configuration management, all that stuff. You bet. So what is the impact to existing applications in your mind that you're seeing? And let me rephrase it differently. What disruptions are you seeing in the developer ecosystem right now that are really holding out for you right now? You can see saying, that's a real disruptor and VMware's moving on that. Yeah, so there's two big ones. One is the enterprise today is mired in the complexity and cost of classic application server hell. Dealing, you know, web logic and web sphere just have them held hostage from a cost structure, a lack of agility, responsibility to the business. And so there's a lot of enterprises that are saying, help me get out of this. And so we have an offering called vFabric, which is really helping them, if you will, get themselves lifted out of that morass and into a lighter weight, more agile framework. And then longer term, there's a vision for what would it, what will it mean when I can just build my applications and not have to worry about the underlying infrastructure at all. And cloud boundary or platform as a service is really focused on that situation where developers today in the average enterprise spend anywhere from three to six months writing IT tickets, trying to provision the right hardware and middleware and databases and message queues and all that stuff. And, you know, developers I meet with say, get me out of that. I know how to write code. I don't want to become an expert in procurements. And so that's, I think, is going to where the promise of foundation is. I can just kind of summarize that. One was application server hell, that's the agility piece. Yeah, getting more modernized. Modernized applications, but when you usually say that, some people say, oh, from the mainframe. And I don't actually mean from the mainframe as much as the classic app server. You know, the web model is. So agility, totally by that's awesome. And what's the second one, cloud boundary? Productivity. Developers can focus on just building their apps and not have to get mired in the underlying. That platform that allows you to. Yeah. It's back to the, if you think about it, abstract pool and automate is a message that not only applies at the infrastructure layer, but it also applies at the developer layer. Developers want to write their code and then whether it runs on Amazon or whether it runs on OpenStack or runs on VCloud. Who cares? We've been saying since 2010 when we first saw the original picture, we were like, obviously, it's an operating system. Merits, Gelsinger, Wintel, that was a fun little clever comment. But now actually abstract, automate, abstract pool and automate, that sounds like the same thing. So the question I want to ask you is, obviously the world's moving into this kind of environment where software's now going to be part of that. You got Flash, you got new apps coming in, all that stuff's happening, agile, more productivity. Question is, what has surprised you the most over the past 24 months? Something that you didn't see that just exploded and changed some of that original thinking or maybe tweaked it, changed the trajectory of it. What was the big surprise for Todd Nielsen in the past 24 months? Two things. One, the device proliferation has been unbelievable to me. There was an article recently in Vanity Fair and as I mentioned, I was at Microsoft. I was there for 12 years and I'm a proud alumni. And there was a comment in the article that I literally had to put the thing down and say no way and go check the fact. And the statement was that five years ago, Apple built one product and that one product has generated or generates more revenue per quarter than the entirety of Microsoft corporations. And the one product was the iPhone. And the fact that one product generated five years ago that's more revenue than all of Microsoft Corporation was unbelievable to me. So I got, this is good, I got to ask you this. So Vanity Fair wrote the article called The Lost Decade against Microsoft. It was kind of a, I mean, they globbed some failures and they strung it together and hung as a really negative piece of Microsoft and to give Microsoft credit, it wasn't really a lost decade. But I do want you to comment on that from your perspective over those 10 years, obviously Microsoft still makes a lot of money, but new markets emerged. So what's the real story there in that lost decade? I don't know what you're talking about with the stack ranking, all that normal stuff. HP did that and it's a normal thing, but specifically Microsoft, what happened there and what could they go to going forward? So a friend of mine a year ago sent me a joke that said what does MSFT, which is our ticker symbol, stand for? And he said it stands for missed search, phone and tablets. And the challenge that Microsoft had in the last decade really wasn't what they did with Office or Windows. I mean, they were able to continue to extrapolate and grow and get tremendous amount of revenue and success there. It's just they missed the next level of innovations. They were in the driver's seat to be leaders for phone and the fact that Android and iOS came out on their watch is crazy. Tablet, they had a great opportunity. Search, Lord only knows they should have done well there. So there's a lot of things that have taken off on the market that they, arguably virtualization is another space that, if you had told me, I left in June of 2000 and if you had told me that some company would slide underneath windows between it and the hardware and encapsulate that space, I would have said you're on drugs. Completely changed the enterprise market. So that's impossible. So David Flynn from FusionIO who you know has been very successful since they've gone public and continue to grow. He said his biggest challenge is the status quo. And I think that's really what your point is. And they just missed, they just didn't look at it and didn't see it as a threat. And that's just, as Pat Gelsinger says, if you're not out in front of the next wave, you're driftwood. So that being said, VMware, you guys are constantly out in front. Joe Tucci said on the CEO panel, the horizontal is getting shorter and the vertical growth is getting steeper and change. So what are you guys doing right now is from a change perspective, managing that. As a management team, you and your cohorts, what's the VMware culture like in process and share some inside knowledge and perspective? It's hard. I mean, there's so much disruption. Usually there's change on one vector, but on every vector and every layer, there's so much change going on right now. It's challenging. And so one of the things we're trying to do as a management team is just communicate more because as long as your employees can see where you're going directionally, then when we do some of these shifts, they don't seem quite, what the heck was the executives thinking? A great example is the NICERA acquisition. Had we not been clear that, hey, we really believe in the software defined data center, our vision there, folks would have said, what, why are you spending that kind of money to do what? But most employees went, hey, that's a logical adjacency. It's something we can really extend our expertise and IP into and makes a lot of sense. Final question, I know we got to get to our next guest. On the developer front next year, you're overseeing that whole vision. You mentioned open source, you mentioned hiring great talent with 70 engineers from NICERA, dynamic ops, these are great ecosystem among the other ones you've done. You got a lot of work to do. What's your outlook for the year, your goals for the year, and then how do you see the developer community shaping for the kinds of categorical developers? Obviously cloud, low level, and the mix of your business relative to those. So I think we'll see more movement in this app modernization that we talked about with Vfabric, I think that's got great momentum. One thing I didn't mention is in Q2, we did the largest deal in the history of VMware was a Vfabric deal, which when you think about it, it's pretty incredible, the largest deal in the history of VMware of all the products was Vfabric. So I think you're going to see revenue size. Revenue size, yeah. Second, I think platform as a service market is going to continue to evolve and shape out and developers are going to, we're going to see more things move into production and lots of excitement there. And then third, the union of big data and mobile and new experiences and new types of applications. I predict that probably next year, we'll start to see some of the new killer apps built on our architecture and our infrastructure that will really be exciting. Todd, you're always a great guest. We really appreciate you coming on and taking the time. Yeah, thanks guys. Todd, great job. You created enabling infrastructure, good things will happen. Todd Nielsen, president at VMware, heading of all the developers. This is theCUBE. We'll be right back with our next guest after this short break.